Payments Received Over The Counter

The bills, so far described, are the obligations of business men and others who operate current accounts. There are usually a number of notes and drafts each day, the primary debtors on which do not maintain running accounts at any bank. Instead of having their bills charged up as they come due, these people attend at the bank counter and pay in cash. In the case of their bills, the teller has but to hold them through the day and accept payment when it is tendered.

Disposition Of Unpaid Bills

At the end of the day probably there are a number of bills not taken up or paid. As they are merely collections, and not the property of the bank, they are easy to deal with. Bills carrying "no protest" instructions are returned as soon as possible to the owners. If the owner is an out-of-town correspondent bank, its unpaid bills are sent back in a letter the same day; if a regular or occasional local customer, they are surrendered on the first opportunity. When the "no protest" instructions are not attached, the bank is under obligation to have the unpaid bills protested, in which case they usually are returned the next day.

Remitted Collections

The remitted bills remain to be dealt with. These are bills taken for collection by the bank, payable at other points. They come largely from local customers-manufacturers, wholesale dealers, and others having debts in sundry places to collect. As soon as these have been recorded in the books they are sent forward to the bank's correspondents in the places at which they are payable. At least, that is the procedure in cases where chartered banks are the correspondents. It happens sometimes that bills are received on points where no chartered bank is established.

There may be private banking offices to act as agents, but they, of course, are not so strong financially as the chartered banks, and not so much confidence is reposed in them. If the bills are drafts requiring to be presented at once, they are forwarded right away to the private banking correspondents. And, if the maturity of the bills is not more than two or three weeks ahead, they are sent "for collection and remittance" just the same as the bills are sent to chartered bank correspondents. But some banks make a difference with bills having a longer currency. They do not wish to have them lie too long in the hands of correspondents, about whose actual position and character they know little. Should the correspondent be dishonest, and at the same time under financial pressure, he might pledge for his own indebtedness the bills sent him by other banks, or negotiate them for his own benefit. Therefore, the more cautious institutions hold the completed bills payable at such points in their own possession, and do not forward them till about ten days or two weeks before they are due; they send unaccepted drafts, with currency of two months or more, forward "for acceptance and return," again forwarding them for collection just before maturity.

Obviously, in the case of these remitted bills, there is nothing to be done at the bank except wait for returns to come in from the correspondents. These returns may be expected on the day after maturity in the case of bills sent to points near at hand; they may not come for a week from correspondents located far away.